FarmPolicy

September 18, 2019

Farm Bill; Trade; Ag Economy; Regulations; and Biofuels

Farm Bill Issues

David Rogers reported last night at Politico that, “Under pressure to cut farm subsidies, Agriculture Committee leaders in Congress are closing in on a 10-year savings target near $23 billion, about a third less than what House Republicans and President Barack Obama had proposed but still a significant change.

“No final announcement has been made, but the bipartisan leadership met Tuesday evening, and three lawmakers told POLITICO that they expected the final savings to be in $23 billion range.”

Mr. Rogers added that, “Upon returning to the Senate floor on Wednesday, Sen. Debbie Stabenow (D-Mich.), who chairs the Senate panel, huddled at length with Senate Budget Committee Chairman Kent Conrad (D-N.D.), a major force as well on farm policy. And her goal — together with House Agriculture Committee Chairman Frank Lucas (R-Okla.) — has been to come up with a single recommendation this week for the new joint debt committee, charged with putting together a $1.2 trillion deficit reduction package next month.

“‘Chairwoman Stabenow has been working closely with farmers, House committee leaders and members of her own committee to develop a bipartisan set of recommendations that both strengthen American agriculture and contribute to deficit reduction,’ her spokesman said. ‘They are continuing to discuss options and determine a final agreement, and aim to send a letter to the Joint Committee by Friday outlining their recommendations.’”

DTN Political Correspondent Jerry Hagstrom reported yesterday that, “The four leaders of the House and Senate agriculture committees are working on a proposal for spending cuts and a new five-year farm bill to present to the super committee in charge of deficit reduction as early as this weekend, House Agriculture Committee ranking member Collin Peterson said Wednesday.”

Mr. Hagstrom explained that, “The bill that established the super committee stated that authorizing committees are supposed to present proposals to the super committee by Friday, Oct. 14. [Agriculture Committee ranking member Collin Peterson (D-Minn.)] said that the four agriculture committee leaders are ‘trying to arrive at a number’ on how much they would cut in farm spending, and that the first communication to the super committee need only be a ‘general letter about what we are going to do.’

“He said the agriculture leaders might make the Friday deadline, or submit it by Monday. The proposal would need to be fleshed out by Nov. 1, he said.

“Peterson said it is ‘unclear how broad’ the bill will be, but that ‘it could potentially be a majority of the farm bill issues.’”

The DTN article explained that, “He [Peterson] said the four agriculture committee leaders are trying to come up with a dollar figure in cuts to offer the super committee in exchange for being able to write most of a new farm bill themselves within the super committee process.

“‘I will accept a higher cut than I normally would if we can lock it in for five years and write it ourselves,’ Peterson said.

“He added that he would rather have the farm bill go through the super committee process than the possibility of having it brought up on the House floor with an open rule.”

Meanwhile, a news release yesterday from the National Association of Conservation Districts (NACD) stated that, “In a letter sent to the ‘Super Committee’ earlier today, the [NACD] and others called for fair treatment for agriculture and conservation programs within any deficit reduction plan.  The letter was signed by a diverse group of nearly 50 conservation, agriculture, wildlife and forestry organizations representing millions of members across the country.”

A related news update yesterday from the Theodore Roosevelt Conservation Partnership noted that, “Officials looking for cost-effective ways to stimulate the economy should look no further than out their own windows: That’s where the authors of a new economic study demonstrate that the great outdoors and historic preservation generate a conservative estimate of more than $1 trillion in total economic activity and support 9.4 million jobs each year.”

Also yesterday, a press release from American Farmland Trust indicated that, “‘The REFRESH Act introduced by Senator Dick Lugar (R-IN) and Rep. Marlin Stutzman (R-IN) includes good ideas for the agricultural safety net, but takes conservation policy in the wrong direction,’ said Jon Scholl, President of American Farmland Trust (AFT).

“The REFRESH ACT’S safety net proposal draws on the Aggregate Risk and Revenue Management (ARRM) program put forward last week by Lugar and Senators Thune (R-SD), Brown, (D-OH) and Durbin (D-IL). This program would provide a viable safety net for commodity producers that is fiscally responsible and reflects modern agriculture.  ‘While we would like to see a few minor changes to this proposal that would make it more market-oriented and less expensive, on the whole AARM would take risk management programs in the direction they need to go,’ adds Scholl…Unfortunately, the REFRESH Act’s conservation proposals are much less heartening.”

With respect to dairy issues, a news release yesterday from Sen. Bob Casey (D-Penn.) noted that, “[Sen. Casey] today introduced the Dairy Advancement Act to ensure Pennsylvania dairy farmers are well positioned to compete in the global dairy market.  The bill encourages development of new dairy products, improves producer revenues and makes milk pricing easier to understand.

“‘This is a common-sense measure that will help Pennsylvania dairy farmers better meet consumer demand while providing farmers with choices to manage risks,’ said Senator Casey. ‘By simplifying the system and rewarding innovation, our farmers will be better prepared to compete in today’s marketplace.’

The release added that, “The Dairy Advancement Act would give dairy producers a choice in risk management tools by allowing them to continue to participate in the Milk Income Loss Contract (MILC) program or to receive support for Livestock Gross Margin-Dairy (LGM-Dairy) program by insuring their revenue margins for future months.

“This bill repeals the Dairy Product Price Support Program. This move will save taxpayer dollars and encourage production of products based on market demands. The bill also makes available low interest loans to manufacturers so they can retrofit their plants to help adjust to changes to the price support system and shift their focus to products that have broader demand.”

A statement yesterday on this proposal by Connie Tipton the International Dairy Foods Assoc. president and CEO, indicated that, “Now we are getting somewhere. The Dairy Advancement Act offered by [Sen. Casey] moves the dairy industry toward consensus on a path forward. Most importantly, the bill will not hamstring our industry with a new government program to limit milk supply as does the controversial Peterson proposal. It sets no limits on the ability of dairy farmers to grow their businesses and offers a safety net without strings attached.”

Jim Byrum, the president of the Michigan Agri-Business Association, indicated in Op-Ed yesterday at the Detroit Free Press Online that, “Although we are under no illusion that tough cuts must be made as our nation struggles to develop a responsible budget, some agricultural programs must be preserved because they are essential to our food supply, American jobs, economic growth and to the health, nutrition and well-being of our families.

“Here are some agricultural priorities that should be included as Congress proceeds:  Preserving risk management programs, especially crop insurance, which help farmers minimize risk from adverse weather or other natural disasters, ensuring the financial stability of the agricultural industry, as well as individual producers.”

In other news, USDA’s Economic Research Service (ERS) released a report yesterday titled, “An Analysis of the Limited Base Acre Provision of the 2008 Farm Act.”

An ERS summary of the report noted that, “The Food, Conservation, and Energy Act of 2008 eliminates direct and countercyclical payments (DCP) and average crop revenue election program payments to farms with 10 or fewer base acres. This report examines the effects of the provision. Findings suggest that Federal budgetary savings from the provision are small.”

In more specific news regarding the supercommittee, Alexander Bolton reported yesterday at The Hill Online that, “The congressional supercommittee, tasked with reducing trillions of dollars from the nation’s record debt, can’t agree on how to count.

“Negotiations within the 12-member panel have been slowed down by an intense debate over the basic question of how to count the savings from any potential deficit-reduction deal.

“With only weeks left before the bipartisan panel hits the congressionally mandated deadline for reporting its recommendations, lawmakers have yet to resolve the thorny question of what kind of baseline to use to score a deal, according to sources familiar with the talks.”

Also yesterday, The Committee For a Responsible Federal Budget added two more recommendations to the organization’s Super Committee tracker.

And Politico writer Jonathan Allen yesterday provided an overview “scorecard for each member” of the supercommittee: “Deficit panel: What are they thinking?”

In other budget news, David Rogers reported yesterday at Politico that, “A nearly $182 billion package of long-delayed spending bills will be brought to the Senate floor Thursday in a first test of both parties’ commitment to reviving some semblance of the traditional appropriations debate that has all but disappeared in recent years.”

The article stated that, “With the 2012 fiscal year already underway, the Senate has approved only one of the 12 annual appropriations bills. And the Reid-McConnell plan would begin playing catch-up by melding three bills into a single measure that would cover at least five Cabinet departments plus space and science agencies…The underlying vehicle will be relatively modest $19.78 billion measure covering the Agriculture Department and Food and Drug Administration.”

 

Trade

Elizabeth Williamson and Tom Barkley reported in today’s Wall Street Journal that, “Congress passed free-trade agreements Wednesday with South Korea, Colombia and Panama, ending negotiations so nettlesome they likely spell the end of progress on such pacts until after the 2012 election.

The House passed all three deals Wednesday evening, and the Senate followed suit. The deals are expected to generate $13 billion in new exports—$11 billion to South Korea—chiefly farm products. As well, they lift a host of non-tariff barriers, including over U.S. professional services.”

Chris Clayton documented several reactions to the passage of the FTAs in an update yesterday at the DTN Ag Policy Blog, additional reaction and debating points on the FTAs can also be found here: House Ag Committee Chairman Frank Lucas (R-Okla.), Senate Ag Committee ranking member Pat Roberts (R-Kan.), Sen. Mike Johanns (R-Neb.), and Rep. Adrian Smith (R-Neb.).

Meanwhile, Pete Kasperowicz reported yesterday at The Hill’s Floor Action Blog that, “House Minority Leader Nancy Pelosi (D-Calif.) on Wednesday said the House should vote on a bill punishing China for its currency manipulation before members consider three free-trade agreements (FTAs), although the House was scheduled to approve the FTAs in just a few hours’ time.”

And Felicia Sonmez reported yesterday at the 2chambers blog (Washington Post) that, “A bipartisan group of senators on Wednesday called on President Obama and House Republican leaders to support a Senate-passed measure that would pressure China and other countries to allow their currency to appreciate, arguing that Chinese ‘cheating’ on the issue has cost the United States more than 1.6 million jobs.

“Sens. Lindsey Graham (R-S.C.), Charles Schumer (D-N.Y.), Jeff Sessions (R-Ala.), Sherrod Brown (D-Ohio) and Debbie Stabenow (D-Mich.) urged action on the bill at a Capitol news conference Wednesday afternoon, one day after the Senate passed the currency measure on a bipartisan 63-to-35 vote.”

 

Agricultural Economy

Scott Kilman and Tom Polansek reported in today’s Wall Street Journal that, “The U.S. Department of Agriculture trimmed its projection of the U.S. corn harvest for the third consecutive month due to poor weather, but grain prices stumbled as the report provided fresh evidence that foreign competitors are gearing up.”

Yesterday’s Crop Production report from the USDA’s National Agricultural Statistics Service (NASS) noted that, “Corn production is forecast at 12.4 billion bushels, down 1 percent from the September forecast and down slightly from the 2010 production estimate. If realized, this will be the fourth largest production total on record for the United States [related graph].”

The report added that, “Soybean production is forecast at 3.06 billion bushels, down 1 percent from September and down 8 percent from last year. Based on October 1 conditions, yields are expected to average 41.5 bushels per acre, down 0.3 bushel from last month and down 2 bushels from last year. If realized, the average yield will be the second lowest since 2003 [related graph].”

Incorporating the NASS production estimates, the World Agricultural Outlook Board yesterday also released its monthly World Agricultural Supply and Demand Estimates (WASDE) report.

A summary of key variables for corn from yesterday’s WASDE report is available here, while a soybean summary can be found here.

Today’s Journal article explained that, “While such a corn crop would be the fourth-biggest on record, it is one billion bushels less than what the USDA had projected before a heat wave gripped the Midwest in July. As a result, ethanol-fuel makers, livestock producers and food manufacturers likely will use more of the nation’s biggest crop than farmers are able to produce for the second consecutive year, which will keep U.S. corn reserves at unusually tight levels for at least another year.

“But the crop-price rally, which began in June 2010, is encouraging foreign farmers to produce more corn, wheat, cotton and oilseeds. That, combined with good growing weather in many countries, is allowing several countries to increase exports, in some cases at the expense of U.S. farmers.”

The Wall Street Journal also yesterday posted a video summary and analysis of the USDA reports.

The AP reported yesterday that, “Consumers should be prepared to shell out a bit more for peanut butter soon…Another hot, dry summer in key producing states and competition from more profitable crops like cotton have significantly shrunk the U.S. peanut crop this year. The tight supply means consumers will soon pay more for yet another grocery staple.”

And a Daily Radio News item from USDA yesterday (“Bigger Peanut Forecast Won’t Change Basic Shortage Scenario”) rhetorically asked, “The USDA has increased its estimate of the size of the peanut crop, but will this change what looks to be a basic shortage of peanuts?”  To listen to this one-minute audio summary, just click here.

 

Regulations

Nebraska GOP Senator Mike Johanns was a guest on yesterday’s AgriTalk radio program with Mike Adams where he discussed a variety of issues.  In part, the conversation turned to his recent effort in the Senate to bring up an amendment regarding farm dust and the EPA, to listen to portion of this discussion from yesterday’s AgriTalk show, just click here (MP3- 3:28).

A recent update posted at the House Energy and Commerce Committee Online stated that, “The Subcommittee on Energy and Power has scheduled a hearing on Tuesday, October 25, 2011, at 10:00 a.m. in room 2322 of the Rayburn House Office Building. The hearing is entitled ‘H.R. 1633, the ‘Farm Dust Regulation Prevention Act of 2011.’  Witness list to be announced.”

And Reuters writer Alexandra Alper reported yesterday that, “Republican lawmakers pushed ahead on Wednesday with bills to limit the U.S. futures regulator’s broad new authority over swaps, despite political divides that make passage unlikely.

“House Republicans are trying to advance seven bills that could constrain the Commodity Futures Trading Commission from developing rules to regulate the $600 trillion over-the-counter derivatives market, as mandated by last year’s Dodd-Frank law to overhaul financial oversight.”

The article added that, “Republicans on the House Agriculture Committee held a hearing on Wednesday to promote the raft of legislation, arguing that the weak economy makes it critical to allow businesses to effectively manage risk.”

 

Biofuels

Andrew Joseph reported yesterday at National Journal Online that, “The ethanol industry is fighting back against the possible expiration of their tax credit at the end of the year with retailers, manufacturers and producers joining a new coalition.

“The Coalition for E85 (85-percent ethanol) says that if the tax credit does expire, millions of Flex Fuel vehicle drivers could pay as much as 38 cents more per gallon and the roughly 2,500 small businesses that have invested in E85 could be hurt.

“The coalition is also emphasizing that ethanol decreases U.S. reliance on foreign oil and is better for the environment than other fuels.”

Keith Good

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